As a result, automakers are slowing their investment and pace of production, raising questions about how quickly Michigan and other manufacturing-heavy states will realize new EV jobs that have been heavily subsidized with billions of state dollars. The state is home to General Motors Corp., Ford Motor Co. and Stellantis NA, the former Fiat-Chrysler.
“It’s unlikely that we’re running out of charge,” Dziczek said about electrification and explaining that sales aren’t likely to decline. “We might just be going a little slower.”
Here are three EV-related issues looming for the industry in 2024 and beyond:
Federal subsidies may not be enough to boost sales
In 2022, the federal $740 billion Inflation Reduction Act set up a series of clean vehicle tax credits, with the goal of cutting EV costs to consumers while supporting a U.S.-based supply chain and domestic manufacturing.
The tax credits were initiated to close the price gap of as much as $10,000 that made EVs more expensive than traditional vehicles. By 2023, the gap had closed, but the average EV price was still just over $53,000.
When the tax breaks launched in 2023, 43 vehicles had enough North American components to qualify for the full $7,500 incentive. In April, the requirements tightened over critical minerals in batteries to ensure that at least 40 percent come from free-trade partners of the U.S., which cut into the number of qualifying vehicles.
Then, on January 1 of this year, as more new requirements took effect, just 19 vehicles qualified for the full $7,500 incentive.
By next year, still fewer are likely to qualify. Looking ahead, fewer global sources of cobalt and nickel will be compliant by 2030, even as more manufacturers seek those minerals.
“This is going to bite (into sales) really hard,” Dziczek said.
Global competition is expanding in the U.S.
The EV product-launch pipeline is robust for Michigan-based automakers, but it’s also strong for global companies — some of which are startup automotive companies — that are also establishing markets in Asia and Europe.
The playing field soon is likely to expand in the U.S., adding to the competition for market share for existing companies. Key among them are Chinese carmakers, which are now the world’s largest exporters of EVs.
BYD Motors, for example, is now the top global EV brand, outselling Tesla. Reports from the Financial Times also indicate that several new Chinese companies are scouting for locations in Mexico.
“You’re used to hearing that General Motors sells more cars in China than in the U.S.,” Dziczek said. “That’s not true anymore.”
Implications come for global and domestic market share. Suppliers also could be impacted, she added, since Chinese automakers are turning to their own supply companies instead of American firms.
One reason is that the newer Chinese models are “delivering what new and tech-savvy Chinese customers want,” said Mark Wakefield, automotive practice lead with the consulting firm AlixPartners.
Low prices are not the driver, he said. The newer manufacturers are focused on “style and technology, not just ride and handling,” Wakefield said. “That’s been a hard thing for automakers to accept. Particularly for chief engineers.”
Ultimately, automaker success will come down to the consumer, said Stephanie Brinley, associate director for research & analysis for S&P Global. Success stories from Asian automakers like Toyota and Hyundai Kia contrast to Daewood and Suzuki, which found the U.S. market difficult to break into.
“They're ready,” Brinley said of Chinese brands.
Questions about presidential election impact
The presidential election in November could lead to changes in EV policies for the second half of the decade.
Under President Joe Biden, federal manufacturing initiatives designed to bring production back to the United States during the pandemic encouraged EV production. Former President Donald Trump, the Republican frontrunner, has sent mixed messages on EVs. He’s said he supports electric vehicles but has clashed with Democrats over emission standards that, in turn, have encouraged the shift.
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January 18, 2024 at 05:56AM
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Auto experts: Competition, politics, fading subsidies could affect Michigan EV sales - Bridge Michigan
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